May/June 2020 AchievABLE™ Newsletter

The May/June issue of our AchievABLE™ Newsletter contains stories on the following:

Building Your Financial Resilience with ABLE Accounts

With finances strained by the COVID-19 pandemic, it is important to take steps to manage money and utilize ABLE account savings (for those who qualify for ABLE accounts). The ABLE National Resource Center (ABLE NRC) is the leading source of objective, independent information about ABLE programs and activities. “ABLE Accounts: Opportunity to Build Financial Resilience” is a document which provides relevant information to ABLE account owners to help maintain their personal and financial health and safety.

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National Disability Institute Launches Financial Resilience Center

National Disability Institute (NDI) recently launched the Financial Resilience Center, an online information hub to help people with disabilities and chronic health conditions respond to the financial challenges of the COVID-19 pandemic. NDI’s Financial Resilience Center answers frequently asked questions about COVID-19 Stimulus; Employment and Unemployment; Public Benefits; Housing, Food, and Healthcare; Money Management; Scams; and more. Provided at no cost, these resources are designed to increase financial stability and reduce economic stress. Additionally, the Center’s partnership with the Association for Financial Counseling, Planning and Education® (AFCPE) provides referrals to one-on-one, virtual financial counseling or coaching, and LifeCents offers online financial wellness training that gives personalized guidance for each individual’s situation. The Financial Resilience Center was developed by National Disability Institute with generous funding from the Wells Fargo Foundation. Visit the Financial Resilience Center and sign up for email updates about new COVID-19 resources. The Financial Resilience Center will be updated frequently.

Ambassador Highlight: Teresa Price

Teresa Price is a self-employed engineer serving on the Board of Directors of National Alliance on Mental Illness (NAMI) Maine. She teaches Family to Family (F2F) classes for family members of people living with mental illness and she recently became a trainer for other F2F teachers. This work has been a driving passion for Teresa ever since her oldest son Logan, who is 27 years old, experienced his first psychotic break in 2010.

Logan and Teresa PriceA brilliant young man who was studying biomedical engineering when he fell ill with schizophrenia, Logan had to drop out of school. While his intellect remains intact, he has not been able to work since stress of any kind exacerbates his symptoms. Until recently, Logan had been successfully living in supported housing about 30 miles away from his parents. Being very frugal with his money and having a low cost of living, he was accumulating too much for SSA’s asset limitation requirements. Additionally, Teresa and her husband wanted him to have a nest egg for the future to enable him to live independently after they are gone. That is where opening an ABLE account came in.

There is no ABLE program in the state of Maine where Teresa and Logan live at this time. As a result, Logan chose ABLE TN (Tennessee) for his account, since ABLE TN was accepting out of state residents. Logan’s ABLE account gives him the option to save for an apartment, a car and to support possible future employment. Just as importantly, contributing to his ABLE account gives Logan a sense of security and accomplishment and helps him to remain stable. In addition to Logan’s savings, Teresa also contributes a few hundred dollars a month into his ABLE account.

Teresa shares that the pandemic has been particularly hard on him. “Logan and his two younger siblings, all in their twenties, are living with us for the duration,” she shared. “Everything feels out of control, so it’s reassuring to our son to realize at least the ABLE account is there for him. He feels sufficiently financially secure that he regularly contributes to our household and donated his stimulus check to the family to help cover our increased household costs. He wouldn’t have been able to do that without the backing of his ABLE account. It rightfully made him very proud he could help us out at a time like this.”

Teresa continues, “For his dad and me, it’s huge knowing he has the ABLE account. We worry about his brother and sister having to support him when we’re gone. Although our son’s living situation is secure now, we know that federal and state funding is likely to plummet due to the pandemic and we cannot take continued support for granted. The funds in his ABLE account will ensure that he has all the services he needs, such as aides coming in a couple of times a week to assist him in household tasks. I would encourage all families of seriously mentally ill people to open ABLE accounts. It’s one thing you can do to feel like you have a little control over your loved one’s future.”

Tips for Individuals Who Receive Supplemental Security Income (SSI) Benefits or Concurrent Benefits

SSI is paid to individuals who have limited income and limited resources. The benefit provides eligible individuals with income for basic living expenses such as food and shelter. The amount an individual receives depends upon meeting the rules of the program including having limited income and paying for food and shelter. When someone does not pay for food or shelter, SSA considers this a type of “income.”

During the COVID-19 crisis, living arrangements may change or be temporary and could affect the amount of SSI an individual is eligible to receive. Carefully review the following examples:

  • If you live in your own place and pay for your own food and shelter costs, regardless of whether you own or rent, you may get up to the maximum SSI federal benefit rate payable in your state. You may also get up to the maximum if you live in someone else’s household and pay your food and shelter costs.
  • If you live in someone else’s household and don’t pay your food and shelter costs, or pay only part of these expenses, your SSI payment may be reduced by up to one-third of the SSI federal benefit rate.

Some promising practices include:

  • Paying your share of food and shelter costs from your SSI payment on a monthly basis, whether you live in your own place or live with others.
  • If needed, supplement these costs with disbursements from your ABLE account.
  • Remember to pay any shelter costs in the same month the money is disbursed from your ABLE account. Otherwise, if it is held over to the following month, it is counted as a resource by SSI and other means-tested benefit programs.
  • Family, friends or a special needs trust may all contribute to your ABLE account without it counting as income to you.

As with every program, there are some exceptions. Always report any changes in living arrangements to your local Social Security office and check with them if you have questions.

ABLE Accounts, Changes and COVID-19: One Size Does Not Fit All!

While each individual and family situation is different, we all share a common concern around our financial future during the COVID-19 crisis. This situation affects everyone’s lives at all levels and will continue to impact household finances for a lengthy period of time. Depending on your own specific and unique circumstances, your need to respond will vary. In this blog, the ABLE National Resource Center will share actions for you to consider, resources, stories and strategies from ABLE account owners as you develop your individualized response.

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AchievABLE™ Top 4 Questions – May/June 2020

1. How will the economic impact payment affect my disability benefits and can I save it in my ABLE account?

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) payment, commonly called the “economic impact payment,” or EIP, is not counted as income. It is not counted as a resource when saved in a non-ABLE account for a period of 12 months under all federal programs and under any state or local program financed in whole or in part with federal funds. This includes:

  • Supplemental Security Income payments
  • Social Security Disability Insurance Benefits, Disabled Widow(er) Benefits, Childhood Disability Benefits
  • Supplemental Nutrition Assistance Program benefits
  • Housing and Urban Development rent subsidies and programs (does not consider resources)
  • Medicare and Medicare savings programs
  • Medicaid
  • Temporary Assistance for Needy Families
  • Veterans Affairs pensions

The great news is that, when the economic impact payment is saved for any length of time in an ABLE account, it will not affect Social Security Disability Insurance benefits including those paid to a Disabled Adult Child or Widow or Widower.

The Supplemental Security Income Benefits program does not count savings of up to $100,000 in an ABLE account for any length of time, too. If the amount over $100,000 exceeds the resource limit, the SSI monthly payment is suspended, but will be reinstated once resources fall under the limit.

2. Will unemployment insurance benefits (UI) affect my benefits and could I save a portion in my ABLE account?

You can save all or a portion of any unemployment insurance (UI) benefits and the supplemental $600 (or less) federal pandemic unemployment compensation (FPUC) in your ABLE account. The UI and PUC will affect your benefits differently depending upon which type of benefit you receive:

  • Social Security Disability Insurance Benefits, Childhood Disability Benefits (also known as Disabled Adult Child Benefits), or Disabled Widow or Widower’s Benefits
    • The UI and FPUC payments will not affect these benefits.
    • These payments are not counted as income by these programs.
    • These payments are not counted as a resource by these programs, if saved.
    • This may be a good opportunity for eligible individuals to explore saving in an ABLE account which grows tax-free. Visit the ABLE National Resource Center for guidance on ABLE account eligibility.
  • Supplemental Security Income Benefits
    • The UI and FPUC are counted as income by the SSI program and may cause the SSI payments to be reduced or to stop.
    • Once the UI and FPUC payments stop or if/when you return to work, SSA should be notified immediately and asked to resume the SSI payments. This can be done without a new application for up to 12 months, after the SSI was “suspended,” due to this income. SSA will likely conduct a review, which is called a redetermination, to confirm that all eligibility rules are met and, if so, will restart the SSI benefit.
    • When SSA conducts the redetermination, one item they look at is “resources.” While you can save some or all of the UI and PUC money in a bank account, it cannot exceed the SSI resource limit for benefits to restart.
    • The SSI program does not count up to $100,000 in an ABLE account; therefor this may be a great opportunity for eligible individuals to explore savings while planning for their future.

3. During the COVID-19 crisis, I am having difficulty continuing to pay my entire federal student loan payment and I am looking for a program to help me. Does a program like this exist?

Yes, there are several options:

  • As a result of the COVID-19 pandemic, federal student loan borrowers are automatically being placed in an administrative forbearance, which allows a person to temporarily stop making their monthly loan payment. This suspension of payments will last until Sept. 30, 2020. People can still pay their loan if they choose. Visit the Federal Student Aid Coronavirus and Forbearance Info for Students, Borrowers, and Parents webpage for more information.
  • At this time, a person may want to negotiate a student loan income sensitive repayment plan. Payments are based upon a person’s income and, after a period of time, a portion of the remaining balance may be forgiven as outlined in the agreement. Repaying the student loan allows a person with a disability to work to their fullest ability and develop a good credit history by repaying their student loan as agreed and, in many cases, qualifying for a portion of the debit to be forgiven. Visit the CFPB webpage, Repay student debt, for more information.
  • The Department of Education Federal Student Aid Office operates a “Total and Permanent Disability (TPD) Discharge” program which relieves qualified individuals from having to repay certain student debt if unable to work. The first step is to review the information online and then email or telephone the program expressing your intent to file. Visit the Federal Student Aid webpage for FAQs on About Total and Permanent Disability Discharge or start your total and permanent disability (TPD) discharge application online.
    • If any of your loans are in default and payments are being collected by wage garnishment and or Treasury Offset, the garnishment or offset may continue. If your request for TPD discharge is approved, the wage garnishments and or Treasury Offset Payments will be discontinued.
    • If you are approved for a TPD discharge, they will instruct your loan holder to return any loan payments received after the date they received the documentation in support of your claim. Your loan holder will calculate the refund amount and issue the refund. This may be another great opportunity for eligible individuals to begin to save in an ABLE account.

4. Where can I find a listing of COVID-19 related qualified disability expenses?

Other than the broad categories of qualified disability expenses (QDEs) identified by the IRS in the Notice of Proposed Rulemaking, there is no formal listing of COVID-19 QDEs. The IRS clarified that a QDE is an expense which allows the account owner to “maintain health, independence and quality of life” and it includes basic living expenses which are not necessarily disability-related. Therefore, any expense which improves your safety, health or well-being would, during the COVID-19 pandemic, be an acceptable expense from an ABLE account.

Visit the archived webinar page on  QDEs to learn more. National Disability Institute has established a Financial Resilience Center which contains a variety of COVID-19 resources. Review our Frequently Asked Questions for more answers to all your ABLE questions.

Extension of IRS ABLE-related Deadlines

Due to the COVID-19 pandemic, the IRS issued Notice 2020-23 that extends the completion of some tax-related deadlines to several types of ABLE account rollovers, and to contributions over annual limits, to July 15, 2020. The extension to July 15, 2020 is automatic. It does not require that you meet any condition of being directly or indirectly affected by COVID-19 and does not require contact with the IRS or the completion of an IRS form, but other steps must be taken by the July 15, 2020 deadline.

IRS Revenue Procedure 2018-58, beginning on page 20, identifies actions eligible for the extended deadline. If a deadline falls on or after April 1, 2020, and before July 15, 2020, that deadline is automatically extended to July 15, 2020.

There are two categories of ABLE account related actions – ABLE Rollovers and Excess ABLE Contributions – listed in the IRS Revenue Procedure that now have a later IRS deadline. We have summarized this information and provided examples below:

First Category: ABLE Rollovers

529 College plan rollover to a 529 ABLE account. You ordinarily have 60 days from a 529 college savings plan withdrawal date to complete the rollover into the 529 ABLE account. These rollovers count towards the annual contribution limit of $15,000. The new program must receive an accurate statement of principal and earnings. Until the documentation is received, the entire amount of the rollover is treated as earnings.

  • Example A: Your parents decide to rollover a 529 college savings account into your 529 ABLE account on March 15, 2020. There is a total of $40,000 in the 529 college savings account and they decide to rollover the maximum each year. They withdraw $15,000 to rollover into your 529 ABLE account. That action must ordinarily be completed within 60 days or by May 15, 2020. Since the completion date falls on or after April 1, 2020 and before July 15, 2020, they have until July 15, 2020 to complete your action. You have $25,000 remaining in your 529 college savings account and you may rollover additional funds up to the calendar limit each year until the college savings account is closed. Contact both the 529 college savings account and your ABLE plan to coordinate the rollover, as each plan allows.

ABLE to ABLE account rollover. Rollovers can be direct or indirect. In a direct rollover, the ABLE account directly transfers from one ABLE program to another. Some states do not permit this and transfer the money to you. In this “indirect transfer,” you would contribute (i.e., rollover) the money received to the new account. You ordinarily must complete the action no later than the 60th day after the date of a payment or distribution from the ABLE account and you must coordinate the action with both programs. The new Plan Manager must receive documentation detailing the portions of the rollover that represent current year general contributions and the current year work contributions. You may complete an ABLE account to ABLE account rollover only once every 12 months without tax consequences. The entire ABLE balance may be rolled over to the new ABLE plan.

  • Example B: On April 15, 2020, you rollover a 529 ABLE account into a new state ABLE program account. ABLE Program “A” sends you a payment on April 25, 2020 for the balance in your ABLE “A” account. You ordinarily have 60 days to rollover these funds into your new ABLE Program “B.” Since the completion date falls on or after April 1, 2020 and before July 15, 2020, you now have until July 15, 2020 (instead of June 25th) to complete this action and to close the Program “A” account.

Second Category: Excess ABLE Contributions

Many ABLE plans monitor annual ABLE contributions and account balances, taking steps to limit contributions within a calendar year. In the event of contributions over the annual contribution limit or over the lifetime account limit, steps must be taken to remove the extra contributions. Some plans may place the funds in a non-interest bearing account pending the return of the funds to the last contributor. Always check with your program for additional information and instructions described in the Plan Disclosure Documents. The deadline is ordinarily April 15, or the tax return deadline, unless an extension has been filed.

  • Example C: Due to miscommunication between you and your parents, the ABLE contribution limit for 2019 was exceeded by $3,000 and your total ABLE contributions were $18,000. You ordinarily would be required to remove the excess $3,000 plus interest/earnings on that amount by April 15, 2020, your tax deadline. However, you now have until July 15, 2020 to withdraw the overage because it falls between April 1, 2020 and July 15, 2020. Please be aware that, once the funds are withdrawn, they may be considered a countable resource for means-tested benefits. The withdrawn ABLE funds may be deposited back into an ABLE account before the 1st of the next month, as a contribution for the new calendar year.

If you have questions, always refer to your state ABLE program disclosure document or contact your state ABLE program. To learn more, visit the Internal Revenue Service webpage: ABLE Accounts – Tax Benefit for People with Disabilities.